Circle launches Refund Protocol to resolve disputes in stablecoin payments

PANews reported on April 18 that Circle announced the launch of Refund Protocol, introducing a non-custodial smart contract system that enables stablecoin transactions to resolve disputes without relying on centralized intermediaries. The initiative aims to address a key flaw in using stablecoins, namely the lack of built-in refund or refusal mechanisms. Refund Protocol gives payment arbitrators specific permissions while limiting their ability to control funds. The arbitrator can lock the funds for a period of time, authorize a refund to the payer's pre-set address and allow advance withdrawal after negotiated fees. However, the arbitrators were prohibited from transferring funds at will, thus maintaining the unmanaged nature of the system. The company acknowledges that the current custodial assets will not generate returns, but suggests that future upgrades can integrate lending agreements like Aave tokenize locked funds and potentially share gains between payees and arbitrators.